South African salaries rise, but purchasing power declines

South African salary earners experienced a modest increase in real take-home pay in July, but this gain in purchasing power has been overshadowed by declining economic conditions. The average real net salary stood at R20,269, representing a 2.2% decrease from the previous year. Despite a 0.4% rise from June, driven by a slowdown in inflation, real salaries are still 2.1% lower than a year ago.

Nominal salaries, before inflation is considered, saw a 0.2% increase in July, up 2.2% from a year prior. However, nominal growth was only 1.6% during the first half of the year, compared to 3.7% in 2025. Economist Elize Kruger highlighted the persistent challenges, stating that salary growth remains sluggish and that households are grappling with a difficult economic landscape.

Although a dip in headline inflation to 4.3% in July offered some relief, providing the first monthly increase in real net salaries in nine months, this improvement falls short of reversing the damage to household purchasing power. Kruger emphasized that while the moderation in inflation brought temporary solace, the broader economic environment and employment conditions remain critical to achieving a sustainable recovery in purchasing power.

Differences in salary growth exist across sectors, with public-sector employees witnessing more significant gains compared to private-sector workers. The outlook for salary improvements is contingent upon a stronger economic recovery, stable inflation, and improved employment prospects.